Friday, 27 March 2009

UK external debt - ₤6.4 trillion

According to the Office of National Statistics, at the end of last year, UK gross external debt stood at ₤6.4 trillion.

Take a look at any UK financial sector database, and one overwhelming observation springs forth. It doesn't matter the sector; public or private, households or businesses, the story is always the same. The UK is drowning in debt.

Where did we pick up this corrosive culture of debt accumulation? We were not always this indolent and extravagant. Yet somewhere along the way, we lost ourselves in a mind numbing spasm of debt fuelled consumption. Now we find ourselves overwhelmed by a mountain of financial claims on our future income.

The destructive era of debt accumulation is now drawing to a close. This is the great message of the UK banking crisis. There are some, like new Labour, who are in denial. But the vast majority of us know we cannot continue spending what we do not earn. We have to stop borrowing and start repaying.

First we the had devaluation of the people - the devaluation of our currency followed this.

Debt was facilitated by government in order to maintain the standard of living of the devalued people - to hide from them the fact that they were being devalued - and to create an illusion of wealth and normality whilst our country was being debased and whored out.

It came from a mass delusion (started by socialism) that you could have what you wanted without ever having to pay for it (or getting someone else to pay for it on your behalf).

You can really trace it back to Lloyd George's pension proposals which were the first 'something for nothing' proposals. Whether they were a 'good thing' or not, it opened the door for more of the same. The result is the benefit sytem we have today.

Hand in hand with that rose the idea that we 'deserved' things, and should have them now, rather than wait, having saved the money first. This I trace back to the end of WW2 and a national feeling of 'We've done all this suffering, now we want to live a bit'. You can trace the rise in consumerism to the Post War age.

Along the way we discovered that taxing 'the rich' gets in only so much cash, and to keep up with the demands for more and more spending, tax was extended to lower and lower income brackets, and rates rose higher and higher.

We also forgot that what is borrowed must be repaid eventually, both privately and nationally. Unless inflation can do the trick for you by stealing the money from the prudent, and giving it to the spendthrift.

Perhaps in 20 years time we will look back with nostalgia at a time when you earned hundreds of pounds a week, and could get a meal out for £10-15. When incomes are £100-200K pa, and the average house costs £750K, current mortgage and credit card debts will assume a lesser importance.